Airbnb to Collect Taxes from Los Angeles Users

Airbnb, the short-term rental app, has recently agreed to go along with officials in Los Angeles by requiring users to collect hotel taxes from their clients. The three-year agreement was signed early this week. And according to LA city officials, money collected by Airbnb in Los Angeles would bring $5.8 million in annual revenue.

The agreement follows the city’s efforts to regulate Airbnb and similar companies locally.

As City Council members discussed what to do with Airbnb in the past few months, the company lobbied its users to stand up against suffocating regulations in a series of emails sent out regularly.

In one of these emails, Airbnb explained that the LA City Planning Commission was considering putting a 90 day cap on the number of nights Airbnb hosts can list their space, a rule Airbnb called “restrictive and arbitrary.” City officials were also considering limiting the number of listings hosts can have, which could affect users who have more than one room to rent, and instituting a registration procedure that would render the process of hosting through Airbnb difficult and expensive.

Another rule LA city officials had considered would also force Airbnb to turn over users’ personal information to the authorities, giving them information on how many nights a host books through the site and how much money renters make. Airbnb warned its users that the city did not detail how this information could be used.

Accusing property owners of evicting tenants to turn their properties into “commercial hotel and motel businesses,” Councilman Mike Bonin was one of the first in Los Angeles to propose Airbnb regulations. But while it is true, many users have, in fact, evicted their tenants in order to list their properties on Airbnb, that alone is not an excuse to regulate Airbnb out of existence. After all, the system works because it’s still affordable.

To tourists looking for an affordable accommodation option, the extra financial burden tied to the hotel tax could mean that renting through Airbnb might not be that affordable after all. To those who use the service as renters to make ends meet, being part of Airbnb may not be as appealing if rates are high because of the new rules.

In an article for US News, Mercatus Center’s Matthew Mitchell urges regulators to “deregulate traditional industries” if their goal is to help all industries and local businesses thrive. Instead of regulating the sharing economy and stifling competition, deregulation could also make it easier for visitors to stay and spend money locally.

Airbnb’s decision to go along with Los Angeles city officials may represent the company’s willingness to compromise, but a real solution to this dilemma will only be produced when lawmakers are honest about their goals.